Title:

Funding the interconnection of the National Register of licensed

operators of goods vehicles, buses and coaches
IA No: DfT00164
Lead department or agency:
Vehicle and Operator Services Agency of the Department for Transport
(VOSA)
Other departments or agencies:

Impact Assessment (IA)

Date: 28/01/2014
Stage: Final
Source of intervention: EU
Type of measure: Secondary legislation
Contact for enquiries:
andrew.cattell@vosa.gsi.gov.uk

RPC: RPC Opinion Status

Summary: Interve ntion and Options

Cost of Preferred (or more likely) Option

Total Net Present
Value

Business Net
Present Value

Net cost to business per

year (EANCB on 2009 prices)

In scope of One-In, Measure qualifies as

Two-Out?

-0.78m

-0.78m

0.07m

No

NA

What is the problem under consideration? Why is government intervention necessary?

Operators of buses, coaches and goods vehicles (lorries) are licensed to ensure road safety and fair
competition. To achieve consistency across Member States, rules on operator licensing are set in
European Union (EU) regulations. One element in support of that process required the creation,
sharing and use of a National Register (NR) of operators, their transport managers and serious
offences. This has been completed and intervention at UK level has already taken place to create our
NR. Further UK intervention is necessary to continue to provide the NR to facilitate the sharing of
information across Member States as required by EU law.
What are the policy objectives and the intended effects?

The objective of the original EU intervention was to ensure that consistent standards are applied and
enforced across the EU. The intended effects are to create a more level playing field for transport
operations across the EU and reduce distortion of competition; raise the professional standards of transport
managers; reduce the administrative burdens on regulators, enforcers and operators; and enhance
compliance with safety and other rules. The continued running of the NR supports this aim by providing
standardised information to facilitate monitoring of operators and intervention by their home state where
serious infringements are found. The specific objective dealt with in this IA is to fund the GB running costs of
interconnection.
What policy options have been considered, including any alternatives to regulation? Please justify preferred
option (further details in Evidence Base)

Doing nothing would not implement the interconnection of the NR requirement and would risk infraction
proceedings.
Option 1: The preferred option is to fund the running cost of the interconnection of the NR by increasing fees
for bus, coach and lorry operators licences. This option spreads the cost over all licences.

Will the policy be reviewed? It will be reviewed. If applicable, set review date: 04/2015
Does implementation go beyond minimum EU requirements?
No
Micro
< 20
Small
Medium Large
Are any of these organisations in scope? If Micros not
exempted set out reason in Evidence Base.
Yes
Yes
Yes
Yes
Yes
What is the CO 2 equivalent change in greenhouse gas emissions?
Traded:
Non-traded:
(Million tonnes CO 2 equivalent)
NQ
NQ
I have read the Impact Assessment and I am satisfied that (a) it represents a fair and reasonable view of the
expected costs, benefits and impact of the policy, and (b) that the benefits justify the costs.

Signed by the responsible SELECT SIGNATORY:

Date:

URN 11/1109 Ver. 3.0

Policy Option 1

Su m ma ry: An alys is & Evid en ce

Description: Funding the interconnection of the National Register of licensed operators of goods vehicles, buses and
coaches
FULL ECONOMIC ASSESSMENT
Price Base
Year 2014

PV Base
Year 2014

COSTS (m)

Time Period
Years 10

Net Benefit (Present Value (PV)) (m)

High: N/A

Low: N/A

Total Transition
(Constant Price)

Years

Best Estimate: -0.78

Average Annual

Total Cost

(excl. Transition) (Constant Price)

(Present Value)

Low

N/A

N/A

N/A

High

N/A

N/A

N/A

0.1

0.8

Best Estimate

Description and scale of key monetised costs by main affected groups

The running costs to Vehicle and Operator Services Agency (VOSA) arising from the interconnection of the
NR are estimated at 100,000 per year. This covers the ongoing cost of software licensing, charges from
ICT supplier to UK Government to meet international standards on data security and use of the data
transmitted. The costs will also fund the additional work to provide detailed information about offences to
enable intervention by national authorities; and the cost of such intervention in GB. These costs will be
recovered from VOSA customers. This recovery is a transfer from customers to VOSA which does not
represent an economic cost.
Other key non-monetised costs by main affected groups

N/A

BENEFITS (m)

Total Transition
(Constant Price)

Years

Average Annual

Total Benefit

(excl. Transition) (Constant Price)

(Present Value)

Low

N/A

N/A

N/A

High

N/A

N/A

N/A

0.0

Estimated 0.0

Best Estimate

Description and scale of key monetised benefits by main affected groups

Improved compliance/ safety of foreign registered commercial vehicles would be expected to lead to a
reduction in the number of fatal accidents that this type of vehicle is involved in however, it has not been
possible to determine what proportion of the overall benefits of the package can be attributed to the
interconnection of the NRs which would be necessary to monetise the benefits of the interconnection.
Other key non-monetised benefits by main affected groups

Without the continued running of the NR, the benefits of the overall package that are explained in the IA of
the overall package1 could not be delivered. The key benefits of the package arise from more targeted and
effective enforcement activity; improving safety and operational benefits to the commercial vehicle industry,
and helping to create a more level playing field throughout the EU.
Key assumptions/sensitivities/risks

Discount rate (%)

3.5

1) Main risk is of infraction proceedings by the European Commission (EC) if the interconnection of the
Register is not implemented. 2) The key assumption is the prediction of volumes of activity over which costs
have to be spread. 3) Costs that are greater than planned or lower volumes would mean a shortfall in
VOSA's income and higher fees in future. Lower costs or higher volumes would have the reverse effect. 4) It
is assumed that the effect on the Public Service Vehicle (PSV) industry will not be significantly different to
that assessed for the Heavy Goods Vehicle (HGV) industry.
BUSINESS ASSESSMENT (Option 1)

Direct impact on business (Equivalent Annual) m:

In scope of OITO?

Measure qualifies as

Costs: 0.1

No

NA

Benefits: 0

Net: -0.1

IA on the EU Road Transport Package is at http://www.dft.gov.uk/consultations/dft-2011-11

Evide n ce Bas e (for s u m m ary s h ee ts )

GENERAL ISSUES
Overall context
1. The system of interconnection of NRs mandated by the European Commission (EC) is
known as European Registers of Road Transport Undertakings (ERRU). The purpose of
connecting NRs is to enable information to be exchanged rapidly and efficiently between
Member States and to facilitate enforcement action by home Member States and deter
operators from committing serious infringements when operating in Member States other
than the Member State in which they are licensed.
2. Creation of the NR was funded by fee increases in April 2012, which were the subject of a
separate IA 2 the final version of which was published in February 2012. That fee increase
did not include the setup or ongoing running costs of interconnecting the NR and this IA
therefore deals only with the ongoing costs of running and maintaining the interconnection
to be funded from fees.
3. EU Regulations require the Interconnection of the NR by 31st December 2012 in such a way
that a competent authority of any Member State is able to consult the NR. The EC has
mandated the technical details of the interconnection.
4. These proposals for fee increases to fund the interconnection of the NR form part of
VOSAs wider financial management strategy which is outlined more fully in the separate IA
VOSA Fees General Increase3; and its published Business Plans and Annual Reports4.
VOSAs published Annual Report for 2011/12 shows that the trading fund carried forward a
retained deficit of almost 25.5 million into 2011/12 which the Agency is required to recover.
This leaves no margin to absorb the costs of additional services such as the interconnection
of the NR. There is some degree of uncertainty as to the final costs however, any reduction
in operating cost will reflect as a lower fee increase either when the final decision is taken
on the proposals in this IA or in future fee changes.
Analytical Assurance Statement
5. The analysis undertaken to assess the impact of this fee proposal uses well-established
economic appraisal techniques. The analysis relies on appropriate sources of evidence
(largely from VOSA) and the work was undertaken by experienced and skilled staff.
Calculation checks were carried out by the peer reviewer. There is scope for challenge
regarding the assumptions used but overall, considerable sensitivity testing was undertaken
in those areas where it was necessary to reflect the residual levels of uncertainty
surrounding the final figures
6. Extra resources have not been available to provide additional peer reviewing and challenge
which may have increased the robustness and accuracy of the analysis. Overall, the
assurance around the production of the analysis is low-medium. Relevant industry data
was used to make key assumptions, however a lack of access to other sources has meant
we were unable to cross check this information. Nevertheless, this measure results only in
benefits and as the assumptions regarding the magnitude of these benefits are generally
conservative, further work would have likely only increased the overall benefits rather than
change the key conclusions of the analysis.

2
3
4

http://www.ialibrary.bis.gov.uk/ImpactAssessment/?IAID=a991e2bcda1a44f69b29beb8c459f9a3
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/192849/annex-4-general-increase-ia.pdf
http://www.dft.gov.uk/vosa/publications/corporatereports/corporatereports.htm

Ba c kg ro u n d
7. The EU has introduced a package of measures (the Road Transport Package) to address
issues of unfair competition, compliance and road safety. During 2011 VOSA created the
NR as required by the EU Regulation containing specified details about licensed road
transport operators, their transport managers and certain offences committed by them. The
Road Transport Package was subject to a separate IA in 2011 5 by the Department for
Transport (DfT) which assessed the impact of the overall package for which the
interconnection discussed in this IA is an enabler.
8. The NR contains data on operators based in other parts of the UK (e.g. Northern Ireland).
Administrations in those territories will be responsible for the cost of including their data in
the register.
Ra tio n a le fo r in te rve n tio n
9. The purpose of licensing operators of buses, coaches and lorries is to ensure road safety
and fair competition by ensuring that operators have the financial resources and
management systems to ensure that their vehicles are adequately maintained, not
overloaded and their drivers are not over tired because of breaking drivers hours laws.
10. There is an existing reciprocal informal arrangement requiring notification of defects on
foreign vehicles to the appropriate licensing authority although the response from some
Member States is considered to have been disappointing and there is therefore scope for
improving the effectiveness of exchange of information.
11. The EC has found current rules in respect of some aspects of licensing of operators of
HGVs and PSVs inadequate because of a lack of consistency in the way that they are
applied across Member States, resulting in unfair competition and issues around
compliance and road safety. Intervention at EU level was necessary to provide the clarity
and consistency required to address these problems given that this is a transnational issue.
Intervention is then required at the UK level in order to implement, enforce and monitor the
new regulations.
12. The objective of this intervention is to connect the UK National Register to other NRs
throughout the Community in compliance with the Community rules and to facilitate the
cooperation together with reducing costs involved in checks for both undertakings and
administrations. The EU Regulation also requires the exchanged data, particularly on most
serious infringements, to be used to trigger interventions where operators appear to be
failing to adhere to appropriate standards for safe and legal operation. Interconnection is
expected to lead to more interventions because of a better flow of data on infringements
when vehicles are operating outside their home Member State.
P o lic y o b je c tive
13. The objective of the interconnection of the NR is to provide standardised information to
support processes to ensure that consistent standards on operator licensing are applied and
enforced across the EU. The intended effect of those processes is to create a more level
competitive playing field for transport operations across the EU; raise the professional
standards of the industry's transport managers; reduce the administrative burdens on
regulators, enforcers and operators; enhance compliance with safety, social and technical
rules; and, lessen the environmental impacts of road transport, notably through reducing
empty running. The requirement for the NR and the processes is contained in EU
Regulations (1071/2009/EC, 1072/2009/EC and 1073/2009/EC). The fee change itself will
not affect operator behaviour. However, without the interconnection of the NR, the
international benefits of the NR cannot be obtained.
5

http://www.ialibrary.bis.gov.uk/ImpactAssessment/?IAID=e667f00b7012490b9b9d8ab1d819d412

14. The objectives of the fee changes proposed in this IA are to fund the interconnection of the
NR; and to ensure that VOSA covers the ongoing costs of running and maintaining that
interconnection; and to ensure that VOSA covers the additional costs of follow up action
required by EU regulations which is triggered by information passed via the interconnection
which would not previously have been available.
Op tio n s Co n s id e re d
15. If Interconnection were not done the UK would be at risk of fines should the EC instigate
infraction proceedings. There would also be a reputational risk to the UK since the UK
supported the Road Transport Package as a means of creating fairer competition; raising
the professional standards of the industry's transport managers; reducing the administrative
burdens on regulators, enforcers and operators; and enhancing compliance with safety,
social and technical rules. In practice, do nothing is not an option since the UK is required
by EU Regulations to connect its NR with other Member States.
16. The following options have been considered:
Fund the GB one-off and/or running costs of interconnection of the NR from taxation.
Fund the GB one-off and/or running costs of interconnection of the NR from fees charged to
those authorised (or applying to become authorised) to operate Heavy Goods Vehicles
(HGVs); and buses and coaches (Public Service Vehicles PSVs).
Fund the GB one off and/or running costs of interconnection of the NR from fees charged by
a reduction in other services.
17. The ongoing running costs of interconnection of the NR are not funded from taxation and
DfT accepted that the levels of existing related services should not be reduced. Funding of
the ongoing costs has, therefore, followed the existing policy of VOSA / DfT that the costs of
VOSAs services are covered specifically by those fees unless the Agencys work falls
outside the scope of its statutory services.
18. Therefore, the only policy option considered in this IA is funding the running costs of
interconnection of the NR from fees and, in accordance with the approach decided upon
following the consultation in 2010 and detailed in the IA on funding of the creation of the NR,
that the cost should be spread across all operator licence fees.

Costs and benefits of Option 1

One In Two Out (OITO) and direct impact on small businesses
19. The interconnection of the NR is being created to comply with EU law and the fee increases
proposed are to meet the cost of complying with that law with no gold plating. As such, it
is out of scope of OITO.
20. The majority of operator licences specify only a low number of vehicles (average of about 4
per licence for HGVs and 7 per licence for PSVs) 6. However this does not necessarily
indicate the size of the business an operator with one HGV could be a micro business
equally it could be a much larger business which operates a number of vehicles below the
HGV weight threshold but only one HGV; or a larger business which sub-contracts most of
its transport but keeps one HGV for special purposes. VOSA does not hold the necessary
information to identify the business size and its collection would create an additional burden
on those businesses. The EU requirement for operator licensing and inclusion on the NR
applies to all business sizes. The total fee burden on even the smallest business
6

http://webarchive.nationalarchives.gov.uk/20130522140420/http://www.dft.gov.uk/vosa/corporatereports-20092010vosaeffectivenessreport.htm

represents only a tiny proportion of the cost of operating a vehicle (0.38% for a single small
HGV) and the changes proposed in this IA add less than about 0.002% to that cost. Taking
all these factors together, it is considered inappropriate to exempt micro businesses from
this small addition to a fee which they are already required to pay.
Costs of Option 1
21. The ongoing cost of running and maintaining the interconnection of the NR and additional
activity generated is estimated at 100,000 per year. This is to cover software licensing and
charges from ICT suppliers to maintain the required links and comply with UK Government
and international standards on data security. The costs also include additional staff time to
comply with the new EU requirements such as considering whether to take action against
licences in light of information on serious infringements whist abroad.
22. These costs are identified in the table below:
Ongoing running costs arising from
interconnection
Annual costs
(k)
System support

71.6

VOSA staff costs

Office of Traffic Commissioner
staff costs
Software licensing costs

7.3
15.5

Total

100.0

5.6

23. The above costs are taken from the full business case for the project to deliver
interconnection.
a. Under VOSAs current Information Technology and Communication (ITC) contract
system support costs for additional functionality are a percentage of the cost of system
changes to create that functionality. The costs used here are based on the business
case cost of creating the additional functionality to interlink the National Registers.
There is a fairly high level of certainty on this since the work to create the additional
software is due to be completed around the end of 2013 and this is on track for delivery
during January 2014.
b. The VOSA staff costs are based on estimates of the time taken to fulfil our obligation to
provide and use information transmitted via the EU wide link. This is estimated at about
1170 hours per year. This is the most difficult figure to estimate as there is a significant
degree of uncertainty as to both the volume of serious infringements expected and their
significance in determining the future of operator licences when compared with
information already available on infringements within GB. The estimate is based on a
combination of extrapolation from data we receive via existing non-electronic channels
and intelligence gathered from our sister enforcement agencies in other EU states. Any
inaccuracies in these estimates will be reflected in the costs attributed to the operator
licensing schemes used in future fees, which form part of the Agencys annual financial
management cycle.
c.

The software licensing costs cover the necessary licences for off the shelf software.
They recur every third year but have been distributed equally over each of the three
years. These charges are based on the current expectation of the structure of the
licences involved. However the pace of change in off the shelf software market makes
future licensing costs difficult to forecast but again any inaccuracy will be reflected in
future fee review calculations.
6

d. Office of the Traffic Commissioner costs relate to extra staff and time to receive
information direct from all Member States on Most Serious Infringements (MSI)
committed by GB Operators within all other Member States. These will have to be
processed through the Office of the Traffic Commissioners (TC) and the outcome
reported back to the notifying Member State.
24. Existing policy is that VOSA running costs are recovered by increasing the fees paid for
applying for and maintaining operator licences. This would apply to the running costs of the
NR too. The fee increase is regarded as a payment transfer in that the fee is transferred
from operators to VOSA. This represents a cost to the operator but a benefit to VOSA.
Transfer payments may change the distribution of income and wealth but do not give rise to
direct economic costs. The total fee income to support operator licensing is estimated as
10million per year, thus a 1% fee increase is needed to raise the additional 100,000.
25. Annex A Illustrates the estimated impact on individual fees of this increase. The fees
affected by this increase will also be affected by a proposed general fee increase (see
separate IA 7); and PSV test fees are also affected by proposed changes in differentials by
location of test. The effect of these is also shown in the tables in Annex A. VOSA has a
policy of rounding fees up to the next whole pound. However to prevent possible distortions
of relativity between fees that compounding of rounding could create, calculations of fee
changes start from the previous fee before it was rounded, apply the percentage
adjustments from all causes and then round the final result. Thus the percentage change
to individual fees will vary from the sum of the individual percentage changes.
26. Annex B illustrates the calculations used to estimate the effect of this change on overall fee
burden on HGV operators and to relate that to their overall operating costs. The calculation
takes account of the fact that grant/continuation fees for HGVs cover a 5 year period and
includes an element for the proportion of new operators (who pay application fees) and of
existing operators who pay variation fees. The estimates indicate that the overall burden of
fees as a result of the changes in this and other IAs would increase annualised average
costs by about 2.39 per operator in 2013/14. For the operator of a single HGV vehicle, the
estimates suggest that the total effect of all proposed fee changes to the average
annualised fees paid to VOSA, including vehicle test fees would add about 0.03% to the
total operating costs if their vehicles were tested at VOSA test facilities and 0.002% if their
vehicles were tested at non-VOSA facilities.
27. Only HGV impact can be modelled since public domain data on PSV operating costs is not
available; however, VOSA have no reason to believe that the effect on PSV operators would
be significantly different.
Benefits of Option 1
28. The NRs and interconnection thereof is a tool to enable the larger package of measures
contained in the EU Road Transport Package. Without the NR, the benefits of the overall
package could not be delivered. These benefits arise from more targeted and effective
enforcement activity; improving safety, and helping to create a more level playing field
throughout the E U.
29. The monetised benefits of the Road Transport Package are summarised in its IA 8 as:
Improved compliance/ safety of foreign registered haulage vehicles would be expected to
lead to a reduction in the number of fatal accidents that this type of vehicle is involved in.
The main difference between the best estimate and high scenarios in terms of benefits is
that the assumed reduction in the number of accidents is greater in the high than in the
best-estimate scenario during the first 3 years. After that the assumed reduction is the same

7
8

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/192849/annex-4-general-increase-ia.pdf
http://www.ialibrary.bis.gov.uk/ImpactAssessment/?IAID=e667f00b7012490b9b9d8ab1d819d412

(10%, i.e., 3.5 fatalities) and, therefore, benefits are very similar. That IA puts the net
benefit (NPV) for the package as 57.8m at 2011 prices over a ten year assessment period.
30. Benefits derived from the interconnection of the NRs are that interconnection ensures that
we receive information about infringements by our operators in other member states. This
enables VOSA to target other checks on these operators and provides information to Traffic
Commissioners to enable them to consider the future of their licences. It also provides
authorities in other Member States with information about infringements by their operators in
the UK which the new EU Regulations require them to take into account in considering
whether they still meet the conditions of the admission to the occupation.

Other proposed changes in fees in 2013/14 not included in this IA

31. VOSAs proposed package of statutory fee changes included two other drivers for change.
The impact of each of the other drivers is assessed in a separate IA. Table 1 below shows
which fees are affected by the preferred option for each driver and the SIs which will need to
be amended to implement the proposed changes.
Table 1 - Proposed changes to fees for 2013/14 affecting costs to business
Driver for change
Service area and Regulations to be amended to change fees
Location
Interconnection General
differentiation
of National
increase
Registers
VOSA fees in GB
HGV testing & notifiable alterations
Goods Vehicles (Plating and Testing) Regulations 1988 (1988/1478)
PSV testing
Motor Vehicles (Tests) Regulations 1981 (1981/1694)
Reduced Pollution Certificate (RPC)
Road Vehicles (Registration and Licensing) Regulations 2002 (2002/2742)
Low Emission Certificate (LEC)
No regulation amendment needed
ADR testing
International Carriage of Dangerous Goods by Road (Fees) Regs 1988
(1988/370)
PSV initial certification (CoIF)
Public Service Vehicles (Conditions of Fitness, Equipment, Use and
Certification) Regulations 1981 (1981/257)
PSV accessibility certification
Public Service Vehicles Accessibility Regulations 2000 (2000/1970)
Individual Vehicle Approval (IVA)
Road Vehicles (Individual Approval) (Fees) Regulations 2009 (2009/718)
Motorcycle Single Vehicle Approval (MSVA)
Motor Cycles Etc (Single Vehicle Approval) (Fees) Regulations 2003
(2003/1960)
Vehicle Identity checking (VIC)
Road Vehicles (Registration and Licensing) Regulations 2002 (2002/2742)
Tachograph fitter/repairer autnorisation
Passenger and Goods Vehicles (Recording Equipment) (Approval of Fitters
and Workshops) (Fees) Regulations 1986 (1986/2128)
HGV operator licence fees
Goods Vehicles (Licensing of Operators) (Fees) Regs 1995 (1995/3000)
PSV operator licence fees
Public Service Vehicles (Operators' Licences) (Fees) Regs 1995
Bus service registration
Public Service Vehicles (Registration of Local Services) Regulations 1986
(1986/1671)
AND
Public Service Vehicles (Registration of Local Services) (Scotland)
Regulations 2001 (SSI 2001/219)
International permits for HGVs
Goods Vehicles (Authorisation of International Journeys) (Fees) Regulations
2001 (2001/3606)

DVA fees in Northern Ireland

Reduced Pollution Certificate (RPC)
Road Vehicles (Registration and Licensing) Regulations 2002 (2002/2742)
Individual Vehicle Approval (IVA)
Road Vehicles (Individual Approval) (Fees) Regulations 2009 (2009/718)
Vehicle Identity checking VIC)
Road Vehicles (Registration and Licensing) Regulations 2002 (2002/2742)

No changes proposed to NI RPC fees

Interconnection of NRs is the subject of this I A.

Location differentiation widens differentials between tests conducted at VOSA provided

test facilities and those at non-VOSA test facilities to achieve fairer distribution of costs and
is explained in a separate IA 9
The general increase is a fee increase to cover rises in VOSAs costs which cannot be
met by efficiency gains alone and is explained in a separate IA 10
32. The fee tables at Annex A show the fees affected by this IA, and of the general increase IA
on those fees.
Risks
33. The main risk associated with this proposal is in respect of the accuracy of predictions of
costs and demand volumes. Particularly in times of economic uncertainty assumptions
made over a year before the proposed changes are to be introduced and more than 2 years
before the next realistic opportunity to change fees are likely to be less accurate than in less
turbulent times.
34. The second risk is the potential for infraction proceedings by the European Commission
(EC) if the interconnection of the Register is not implemented.
Assumptions
35. Key assumptions are on:
VOSAs overall financial position at the end of 2012/13 (from a combination of unpredicted
changes in levels of demand or costs which creates uncertainty on the level of overhead
which has to be attributed to each service area)
At the time of writing the initial impact assessment the recent unprecedented economic
position has led VOSA to assume a cautious to pessimistic approach with this assumption
built in to VOSA costs. Currently, the level of services provided by VOSA remains fairly
constant therefore this assumption has not materialised and so has not had an effect upon
VOSA costs.
changes to VOSAs costs and the extent to which these can be absorbed by efficiency
improvements (affected by pressures on pay (following 4 years of freeze and 2 years of
imposed constraint), costs of bought-in services as a result of market forces and the need to
re-let VOSAs Information Technology and Communications (ITC) contract within the
appraisal period which creates uncertainty on the level of direct costs to be attributed to each
service areas)
VOSA have managed to absorb a number of inflationary costs however, following further
review of the stable position of pay freezes and reductions in overheads such as travel costs
and the re-let of VOSA ITC that occurs in 2015, means no further changes to this impact
assessment in relation to costs and benefits.
the level of demand for services in 2013/14 (affected by general levels of demand for
transport and changes in the structure of the road transport industry which we regulate
creates uncertainty on the percentage change to individual fees needed to generate the
target income change)
Inevitably, the level of demand for VOSA services fluctuates throughout the year and from
year to year. Historically VOSA data shown in its Effectiveness Reports published each year
and available on line will show the general level of demand for our services and there is
some degree of uncertainty in relation to our target income. Further review of data in this final
impact assessment (VOSA Effectiveness Report 2013) shows a trend for a reduction in our
9
10

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/192847/annex-2-location-differentiation-ia.pdf
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/192849/annex-4-general-increase-ia.pdf

10

services that will mean we have to give consideration to fees and charges in the review
period following implementation of this proposal. We expect this to be undertaken during
2014.
the levels and complexity of detected infringement (affected by the levels of non-compliance
in the road transport industries, the resource put into detecting infringements throughout the
EU and the effectiveness of targeting of those activities creates uncertainty on the number of
infringements which require consideration plus the time taken to investigate/assess each
infringement).
We have assumed that the level of complexity for infringement detection remains constant
within this impact assessment and currently we do not expect this level to change. Should the
continuing interconnection of the national register suggest levels of infringement activities
that require additional resource we will give consideration fees and charges in the review
period following implementation of this proposal. We expect this to be undertaken during
2014.
It has also been assumed that:
because of the potential inaccuracies in estimation of costs discussed in paragraph 21 and
because any inaccuracies in these predictions will be taken into account in preparing fee
change proposals for 2015 and beyond. From information available when those fee changes
are planned we have not attempted to account for cost inflation over the appraisal period.
Direct costs and benefits to business
36. As mentioned earlier the majority of customers for VOSAs services covered by this IA are
businesses. Some civil society organisations may also be part of the customer base. All
income for services covered by this IA has therefore been treated as coming from
businesses and civil society organisations.
37. In every case, the cost of fees paid to VOSA forms only a tiny part of the cost of owning or
operating vehicles. Annex B shows the relationship between fees paid to VOSA and typical
operating costs for businesses of various sizes operating HGVs. The analysis estimates
that the overall effect of the proposed increases ranges from costs reductions estimated at
0.003% of operating costs to increases of about 0.031%. The most significant factor on
where within this range a particular operator falls is where they take their vehicles for test. It
also looks at this relationship for the HGV rental and leasing industry as a whole. This
analysis estimates that the overall effect of the complete proposed increases in Location
Differentiation; General Increase and Interconnection of the NR 11 ranges from costs
reductions estimated at 0.008% of operating costs to increases of about 0.092%. The data
used to estimate this effect comes from the 2012 edition of Cost Tables published by the
Road Haulage Association and from statistics published in Transport Statistics GB.
38. Similar analyses for other services have not been possible because public domain data on
typical ownership and operating costs is unavailable.

Consultation results
39. A formal consultation on the proposed changes covered by this and the two related IAs
mentioned under References was conducted between 30 April and 11 June 2013 (6 weeks
with most responding on-line). One question related to the contents of this IA. Overall
there were 45 responses in total.

The majority (58%) of respondents did not favour this proposal. However, the
reasons given varied considerably.

11

The overall effect upon business for each element of the increases is tiny, therefore the cost reduction and operating costs data for all three
elements of change have been included in this calculation

11

Some respondents questioned where the costs associated with interconnection arose
from. Some confusion was evident between the funding streams for operator
licensing and VOSAs activities to encourage and enforce safe and legal operation of
HGVs and PSVs, leading one respondent to suggest that these fees should be
increased in line with inflation (i.e. by more than proposed) to fund better targeting
technology.

One trade association considered that the running costs, as well as the set-up costs
should be funded from general taxation.

Several suggested that these costs should be met by internal efficiencies.

One respondent considered that the new processes were only relevant to non-UK
operators and should therefore not be charged to operators whose vehicles did not
leave the country.

Consideration

VOSA has already made considerable efficiency savings in recent years. The predicted
costs used to determine the income needed takes account of continuing efficiency
savings by continuous improvement of working methods. Thus if VOSA were to try to
absorb this additional cost, service delivery would suffer, leading to slower turnaround
times for licensing transactions that would further raise VOSA costs.

Operator licence fees cover the costs of the operator licensing system primarily central
licensing administration and the cost of the independent Traffic Commissioners and their
support. The enforcement element of test fees covers the cost of activities by VOSA
staff to encourage and enforce safe and legal operation of HGVs and PSVs, whether at
roadside checks, operators premises or other activities to make those using and
providing vehicles aware of the standards expected and target those at greatest risk of
failing to meet those standards.

Interconnection and the activity flowing from it is an integral part of operator licensing
administration.

As explained in the consultation document and associated IAs, the costs associated with
interconnection cover the ongoing running costs of the IT systems needed to exchange
data and the cost of additional reviews of the licences of British operators committing
serious infringements when abroad as well as providing other Member States with
information about infringements by their operators in GB. The additional information on
British operators is expected to highlight operators whose inadequacies may not have
been recognised using data on their performance in GB alone.

Updating technology used to support better targeting and enforcement technology

identified in the second bullet above, is part of the enforcement activities and is already
in VOSAs spending plans. Whilst VOSA could always use extra money to update these
technologies more often than already planned, it considers current spending plans are
adequate and that keeping fee levels as low as possible to foster growth is appropriate at
this time.

DfT have listened to comments made at the last fee change consultation and are funding
the one-off costs of complying with the additional EU requirements from general taxation.
They considered it inappropriate to fund ongoing costs in the longer term from general
taxation.

All operators benefit from the new EU requirements which aim to promote equal
treatment of operators throughout the EU reducing unfair competition from illegal
operation to all sectors of the industry not just those who operate abroad.

12

40. Consultees were asked for any information which could be used to improve the accuracy of
the IA. No such information relating to this IA was forthcoming.
41. Having considered the consultation response Ministers continue to favour implementing
Policy Option 1 - Funding the interconnection of the National Register of licensed operators
of goods vehicles, buses and coaches. A full report on the consultation will be published
when the fee changes are implemented.
42. OITO, Small and Micro-business Assessment
43. The proposals alter the amount of fees but do not change the level of regulation and as
such are out of scope of OITO.
44. As these measures are planned to come into effect after 31 March 2014 we have
considered the regulatory proposal in relation to small and micro business assessment.
Regulations impose minimum road safety requirements and therefore licensing places a
statutory obligation on the user to ensure compliance with minimum regulatory obligations.
Licensing fees paid reflect the cost of services provided and consequently this area of
business is not exempt and we believe that no mitigating options are necessary because
there is no disproportionate burden.
45. Annex B shows the result of calculations and therefore a quantitative assessment of the
effect of changes to HGV fees as a result of the overall effect of the entire fee changes
proposed for 2013/14 on the total amount paid in fees to VOSA and on the overall
operating costs for typical HGV micro business. As we described in Paragraph 37, by far
the most significant part of the change is the increased differentiation by test location which
is the subject of a separate IA.
46. The fee changes proposed in this IA are small; the total fee bill for all customers is only a
tiny proportion of the cost of operating or owning vehicles; and all customers are treated
equally, they are unlikely to have any impact on:

Economic or financial issues other than those specifically identified in this IA or

Social issues

Environmental issues
47. The changes proposed by this impact assessment will affect operating costs and these will
rise by a small amount, but this should be taken in the context of the overall effect of the
three changes proposed. (General Increase; Interconnection of the National Register and
Location Differential)
48. Any change in CO 2 would be determined by businesses reaction to the increase in fees and
spread across a variety of factors including; distance travelled laden or unladen; fuel
efficiency and weight of goods carried. The proposed charge for the running costs of the
interconnection of the national register will not in itself change these factors and therefore
as such the effect upon change in CO 2 would not be quantifiable.
Post Implementation Review (PIR) plan
Basis of the review
Annual review of VOSA fees
Review objective
The annual review of VOSA fees ensures that fees and transaction volumes are meeting
current transaction costs
Review approach and rationale
Monitoring data is reviewed to ensure that long term costs and income are matched
Baseline
13

Annual review as part of the Agency accounting process

Success criteria
Long term balance of fees and transaction costs
Monitoring information arrangements
VOSAs annual business plan and accounts will provide the required data
Reasons for not planning a review
N/A A review will be planned
Consultation IA RPC12-DfT-1444(2) RPC view:
This consultation overall assessment was Green and therefore the IA is fit for purpose. The
issues raised in our previous opinion (18/07/12) have been addressed

14

ANNEX A FEE TABLES

This Annex shows result of calculations of the effect of changes to test fees as a result of the
overall effect of the entire fee changes proposed for 2013/14 12 paid to VOSA where tests
are conducted at VOSA or non VOSA facilities. By far the most significant part of the change is
the increased differentiation by test location which is not the subject of this IA. The overall
package proposed includes a 1% increase in operator licence fees to fund the interconnection
of NRs and a general increase of 1% for inflation, each of which is considered in a separate IA.
Part 1 shows the fees affected by all three changes.
Part 2 shows the fees affected on two changes NR Interconnection and General Increase.
A spreadsheet showing the detailed calculations is available on request from the contact
mentioned on the first page of this Impact Assessment.
The following tables show present and proposed fees for services affected by this IA.

12

The overall effect upon business for each element of the increases is small, therefore the cost reduction and operating costs data for all three
elements of change have been included in these calculations

15

ANNEX A FEE TABLES

Part 1 Fees affected by this IA which are also affected by location differentiation and general increase

PSV Test Fees under the Motor Vehicles (Tests) Regulations 1981 (SI 1981/1694)
Current Fees
Fee
Description
Test & full 23 + passengers at
retest VOSA
23 + passengers at
non-VOSA

Retest
PAID
(partial up
to 14
days)

Retest
PART
PAID
(minor
items)

Enforcement
general
New fee
increase
element

Proposed fee
O licence interconnection
Testing element
NR
general
New fee Location General New fee
connection increase element
change increase element
increase

Enforcement
element

O licence
element

Testing
element

Rounded
total fee

New
rounded
total fee

Overall
%
change

39.60

3.25

96.08

139

0.40

40.00

0.03

0.03

3.32

23.25

1.19

120.52

164

18.0%

39.60

3.25

88.69

132

0.40

40.00

0.03

0.03

3.32

-3.90

0.85

85.63

129

-2.3%

OoH sup 23+

passengers
9 - 22 passengers
at VOSA

0.00

0.00

52.32

52

0.00

0.00

0.00

0.00

0.00

0.00

0.52

52.84

53

1.9%

39.60

3.25

67.48

111

0.40

40.00

0.03

0.03

3.32

16.33

0.84

84.65

128

15.3%

9 - 22 passengers
at non-VOSA

39.60

3.25

62.29

106

0.40

40.00

0.03

0.03

3.32

-2.74

0.60

60.15

104

-1.9%

0.00

0.00

38.15

38

0.00

0.00

0.00

0.00

0.00

0.00

0.38

38.53

39

2.6%

0.00

0.00

62.91

63

0.00

0.00

0.00

0.00

0.00

15.22

0.78

78.91

79

25.4%

0.00

0.00

58.07

59

0.00

0.00

0.00

0.00

0.00

-2.56

0.56

56.07

57

-3.4%

0.00

0.00

25.07

25

0.00

0.00

0.00

0.00

0.00

0.00

0.25

25.32

26

4.0%

0.00

0.00

43.46

44

0.00

0.00

0.00

0.00

0.00

10.52

0.54

54.52

55

25.0%

0.00

0.00

40.12

41

0.00

0.00

0.00

0.00

0.00

-1.77

0.38

38.74

39

-4.9%

0.00

0.00

18.53

19

0.00

0.00

0.00

0.00

0.00

0.00

0.19

18.72

19

0.0%

0.00

0.00

12.10

12

0.00

0.00

0.00

0.00

0.00

0.00

0.12

12.22

13

8.3%

OoH sup
9 - 22 passengers
23 + passengers at
VOSA
23 + passengers at
non-VOSA
OoH supp 23+
passengers
9 - 22 passengers
at VOSA
9 - 22 passengers
at non-VOSA
OoH supp
9 - 22 passengers

All

16

ANNEX A FEE TABLES

Part 2 Fees affected by this IA which are also affected general increase

These fees are affected by National Register interconnection and general increase
HGV O Licence Fees under the Goods Vehicles (Licensing of Operators) (Fees) Regulations 1995
(SI 1995/3000)
Fee Description

Application
Variation
Grant of Licence
Continuation of Licence
Interim Licence issue

Current Fees
Proposed (2013/14) Fees
2012 Fee 2012 Fee
NR
2013 fee
General
Unrounded Rounded interconnection
(rounded)
Increase
increase
253.90
2.54
2.56
254
259
253.90
2.54
2.56
254
259
396.85
3.97
4.01
397
405
396.85
3.97
4.01
397
405
67.21
0.67
0.68
68
69

Overall
%
change
2.0%
2.0%
2.0%
2.0%
0.8%

PSV O Licence Fees under the Public Service Vehicles (Operators' Licences) (Fees) Regulations
1995
Current Fees
Proposed (2013/14) Fees
Fee Description
Overall
2012 Fee 2012 Fee
NR
General
259
%
Unrounded Rounded interconnection
Increase
increase
change
Application - Standard or
205.96
2.06
2.08
2.4%
206
211
Restricted licence
Variation application - all

120.55

Application - special licence

Continuation - special
licence

1.21

1.22

60.90

121
61

0.00

60.90

61

0.00

1.7%

0.61

123
62

0.61

62

1.6%

17

1.6%

ANNEX B EFFECT ON OPERATING COSTS

This Annex shows the data used and the result of calculations of the effect of changes to HGV
fees as a result of the overall effect of the fee changes proposed for 2013/14 on the total
amount paid in fees to VOSA and on the overall operating costs for typical HGV operating
businesses of various sizes. By far the most significant part of the change is the increased
differentiation by test location which is NOT the subject of this IA. The overall package
proposed includes a 1% increase in operator licence fees to fund the interconnection of NR and
a general increase of 1%, each of which is considered in a separate IA.
Part 1 shows the source data. Vehicle operating costs are taken from Road Haulage
Association Cost tables 2012 based on their Annual Survey on the Movement of Prices for the
year to 30 September 2011 they represent real costs from a large range and sample of road
transport companies. These costs will obviously vary depending on the business model of
individual operators. It has not been possible to carry out modelling of the effect on PSV
operators because we have been unable to obtain equivalent data on PSV operating costs.
Part 2 shows the effect on those who choose to have their vehicles tested at VOSA facilities
and at non-VOSA facilities. Part 2 also shows the effect on the overall operating costs of the
rental and leasing sub-sector of the road freight industry.
A spreadsheet showing the detailed calculations is available on request from the contact
mentioned on the first page of this IA.
PART 1 SOURCE DATA
Vehicle Operating Costs
Source: RHA "Cost
tables 2012".

Type

Total Operating Costs

Fixed costs

Mileage
costs

Miles PA

Total PA

Miles

7.5t 2 axle rigid

13t 2axle rigid
18t 2 axle rigid

44,265
49,650
56,150

43.1
49.7
55.6

45,000
45,000
50,000

63,660
72,015
83,950

26t 3 axle rigid

64,450

72.8

50,000

32t 4 axle rigid tipper

70,020

84.7

32 - 33t 2 + 2 axle artic

38t 2 + 3 axle artic
44t 3 + 3 axle artic

69,117
77,228
84,758

74.6
79.0
85.1

Rental and Leasing Industry (RLI) Costs

Including depreciation, licences, insurance, interest on capital, tyre and
maintenance costs for motor vehicles from the RHA tables but excluding any
element of overhead. Mileages per annum represent total vehicle mileages as
used in RHA tables (regardless of who creates the mileage) for motor vehicles
but are halved for trailers to take account of trailer to vehicle ratio of just under
2:1.
Type
Fixed costs Mileage costs Miles p/a Total p/a
p/a
per mile

Miles

7.5t 2 axle rigid

13t 2axle rigid
18t 2 axle rigid

11,715
12,850
15,050

10.7
12.7
14.2

45,000
45,000
50,000

16,530
18,565
22,150

100,850

26t 3 axle rigid

19,900

18.3

50,000

29,050

50,000

112,370

32t 4 axle rigid tipper

23,850

23.0

50,000

35,350

60,000
70,000
70,000

113,877
132,528
144,328

32 - 33t 2 axle tractor

38t 2 axle tractor
44t 3 axle tractor
3 Axle curtain trailer

15,800
18,000
21,850
2,670

10.7
11.3
12.9
5.6

60,000
70,000
70,000
35,000

22,220
25,910
30,880
4,630

Rental & Leasing Industry Fleet size

Proportion of commercial vehicle rental and leasing fleet provided by BVRLA
members (source BVRLA website)
Fleet size

Motor vehicles
Trailers

18

65%

BVRLA members

Total fleet

109,949
19,297

169,152
29,688

ANNEX B EFFECT ON OPERATING COSTS

O licence per licence fees Planned 2013/14

Licences in issue
New applications
PA

Variations per year

5,709

New App
254.00
259.00
5.00

2012
2013
Change

Volumes from VOSA O Licence Team 2012

84,038

Continuations PA
Grant / Cont (5 years)
397.00
405.00
8.00

Test fees by vehicle type

2012
2013
Op cost Change
Trailer

98.00
113.00
15.00
Test

2012
2013
Op cost Change

59.00
71.00
12.00

At non-VOSA premises (ATF/DP)

Vehicle
Test
2012
2013
Op cost Change
Trailer

93.00
92.00
-1.00
Test

2012
2013
Op cost Change

56.00
55.00
-1.00

Average
119.52
121.91
2.39

227,100 From Transport Statistics GB, 2011 edition (table 09.12, 2011)

Trailers

Test

Variation
254.00
259.00
5.00

reproduced)

2.16

At VOSA premises
Vehicle

14,350

Final failure rates (from VOSA data warehouse)

14.2% Trailers
13.8%
105,300 From Transport Statistics GB, 2011 edition (table 9.6 specially

Motor vehicles
Artic tractors
Trailer ratio

7,565

2 axle motor vehicle

retest
average veh
40.00
103.70
50.00
120.12
10.00
16.42
2 axle trailer
retest
average veh
28.00
35.00
7.00

62.86
75.83
12.97

Test

123.00
145.00
22.00
Test
71.00
85.00
14.00

2 axle motor vehicle

retest
average veh
37.00
98.27
36.00
97.13
-1.00
-1.14
2 axle trailer
retest
average veh
26.00
25.00
-1.00

59.59
58.45
-1.14

3 axle motor vehicle

retest
average veh

Test

37.00
47.00
10.00

130.97
154.97
23.99
average veh
76.10
91.48
15.38

3 axle motor vehicle

retest
average veh

117.00
115.00
-2.00
Test
67.00
65.00
-2.00

19

56.00
70.00
14.00
3 axle trailer
retest

52.00
50.00
-2.00
3 axle trailer
retest
35.00
33.00
-2.00

4 axle motor vehicle

average
retest
veh
150.00
73.00
160.40
179.00
92.00
192.10
29.00
19.00
31.71
Test

124.40
122.12
-2.28
average veh
71.83
69.55
-2.28

4 axle motor vehicle

retest
average
veh
141.00
68.00
150.68
138.00
65.00
147.26
-3.00
-3.00
-3.43
Test

ANNEX B EFFECT ON OPERATING COSTS

PART 2 EFFECT ON BUSINESSES

VOSA charges and proposed changes in charges as a proportion of operator business

Operator business size (assuming all vehicles specified on licence)
Small
Medium
Large
(4 mixed MVs + proportin of (10 mixed MVs + proportion
(250 mixed MVs +
trailers - average per
of trailers)
proportion of trailers)
licence)
Change
VOSA Charges Change
VOSA
Change from
VOSA
Change
from 2012
2013
from 2012
Charges
2012
Charges
from 2012
2013
2013
18.81
834.53
108.82 1,894.23
270.96 47,450.13
7,215.57
0.030%
0.235%
0.031%
0.208%
0.030%
0.199%
0.030%
1.25
685.41
-8.23 1,518.28
-24.56 37,362.68
-733.45
0.002%
0.193%
-0.002%
0.166%
-0.003%
0.156%
-0.003%

Micro
(one 7.5t rigid)

Tests at VOSA
Tests at ATF/DP

VOSA
Charges
2013
242.03
0.380%
219.04
0.344%

VOSA charges and proposed changes in charges as a

proportion of rental and leasing industry costs
Tests at VOSA
Tests at ATF/DP

Total fee costs (m)

% of total costs
Total fee costs (m)
% of total costs

20

VOSA Charges
2013
25,826,102
0.622%
20,477,973
0.493%

Change from
2012
3,836,815
0.092%
-351,409
-0.008%